Mutual fund houses ask approval to introduce more funds specific to children
Posted on: 01/Aug/2016 10:27:30 AM
At least four fund house have filed a draft offer letter with the SEBI, or the Securities Exchange Board of India, seeking approval to launch plans that are children specific. These include Reliance Children Fund, SBI Children Benefit Fund, DSP Black Rock Children Gift Fund and Mahindra Mutual Fund’s Bal Vikas Yojana.
The offer letter says that the the main objective of the scheme is to generate long-term capital appreciation and income by investing predominantly in equity & equity related instruments and balance in debt and money market instruments to help the investor in achieving the financial goals for the children.
A senior executive of SBI Mutual Fund says, We already have a debt oriented scheme focussed on children. Since equity is the flavour of the season, we expect our new scheme to gain significant traction among investors. While child plans are almost similar to other equity oriented schemes in terms of the investment philosophy, one major advantage of child plans would be the way an investor perceive this scheme. Investors would hold this scheme with a slightly longer time horizon which would be closely aligned with their child’s financial goals. The financial goals could be anything like paying higher education fees or to meet marriage expenses. The tendency to withdraw funds from such schemes to meet other financial requirements would be less. Investors could choose a systematic investment plan, or SIP, route or a lump sum investment according to their ability.
A senior executive from DSP BlackRock Mutual Fund says, Units in the scheme should be held in the name of beneficiary child, who must be less than eighteen years on the date of investment. The investment plan will have sub plans like compulsory lock-in and no lock-in. Investment will be locked-in till the unit holder, which here is the beneficiary child, is 18 years of age. Investment may be redeemed after the unit holder is 18 years of age or 3 years from the date of allotment, whichever is later.
